PROBLEM 1

In your audit of National Inc.’s cash account as of December 31, 2014, you ascertained the following
information:
The bookkeeper’s bank reconciliation on November 30, 2014, is as follows:
Bank balance per bank statement, November 30 P24,298
Add: Deposit in transit 3,648
Total P27,946
Less: Outstanding checks
No. 3408 P440
3413 300
3414 6,820
3416 3,924
3417 800 12,284
Balance P15,662
Add: Bank service charge for November 36
Book balance per General ledger, November P15,698
* Entered in Check Register in December

The cash Receipts Journal shows a total receipts for December of P371,766. The Check Register reflects
totals checks issued in December of P377,632. A collection of P5,912 was recorded on company books
on December 31 but was not deposited until January 2, 2015.

The balance per bank statement at December 31, 2014, is P17,516. This statement shows total receipts
of P373,502 and checks paid of P380,284.

Your examination revealed the following additional information:

a. Check no. 3413 dated November 24, 2014, was entered in the Check Register as P300. Your
examination of the paid returned with the December bank statement reveals that the amount of
the check is P30.
b. Check no. 3417 was mutilated and returned by the payee. A replacement check (no. 3453) was
issued and cleared the bank in November. Both checks were entered in the Check Register but
no entry was made to cancel check no. 3417.
c. The December bank statement includes an erroneous bank charge of P480.
d. On January 3, 2015, the bank informed your client that a December bank charge of P42 was
omitted from the statement.
e. Your examination of the bank credit memo accompanying then December bank statement
discloses that it represents proceeds from the note collection in December for P4,000.
f. The outstanding checks at December 31, 2014, are as follows:
No. 3408 P440
No. 3417 800
No. 3418 2,814
No. 3419 5,788

1. What is the total book disbursements for the month of December?

a. 377,668 b. 377,710 c. 377,632 d. 377,596
2. What is the book balance at December 31?
a. 9,832 b. 9,072 c. 9,754 d. 9,796
3. What is the total outstanding checks at December 31?
 a. 8,602 b. 9,072 c. 9,042 d. 9,842
4. What is the adjusted bank balance on November 30?
a. 16,690 b. 16,732 c. 16,804 d. 16,774
5. What is the adjusted book receipts for the month of December?
a. 375,724 b. 371,766 c. 371,238 d. 375,766
6. What is the adjusted book disbursements for the month of December?
a. 377,590 b. 377,662 c. 377,674 d. 377,632
7. What is the adjusted book balance on December 31?
a. 14,824 b. 14,866 c. 14,908 d. 14,782

PROBLEM 2
The following data are assembled by the accountant of Angel Trading:
Nov. 30, 2013 Dec. 31, 2013
Balance per accounting records P 16,470 P 40,285
Balance per bank statement 107,082 137,817
Undeposited collections 8,201 12,880
Unpresented checks 27,718 30,112
Bank charges 720 600
DAUD* - 8,250
Notes placed in the bank for collection, collected by the bank 71,815 80,900

* Redeposited in the same month. No entries are made to book the return and redeposit. (Assume that these are
to be treated as book reconciling items)

The bank statement and the company’s cash records show the following totals:

Debits per bank statement P 218,373

Credits per bank statement 249,108
Cash collections per cash book 164,637
Checks written per cash book 211,917

Determine the following:

1. Book debits in December
A. P 245,537 B. P 236,452 C. P 164,637 D. P 232,132
2. Book credits in December
A. P 212,637 B. P 211,917 C. P 213,237 D. P 212,517
3. Adjusted cash balance on November 30
A. P 88,285 B. P 89,005 C. P 87,565 D. P 86,965
4. Adjusted bank receipts in December
A. P 253,667.40 B. P 249,108 C. P 253,067 D. P 253,787
5. Adjusted book disbursements in December
A. P 218,373 B. P 221,007 C. P 219,567 D. P 220,767
6. Adjusted cash balance on December 31
A. P 120,585 B. P 121,065 C. P 128,835 D. P 112,215

PROBLEM 3
Your audit senior instructed you to prepare a four column proof of cash receipts and disbursements for the month
of December, 2013.
The bank reconciliation prepared by Bitter Trading at November 30 is reproduced below:

Unadjusted bank balance P 96,800 Unadjusted book balance P 58,640

Add: deposit in transit 18,000 Add: CM – Note collected 40,320
Total 114,800 Total 98,960
Less outstanding checks: Less: DM bank charges (160)
No. 276 P 2,400
282 7,200
284 4,800
285 1,600 16,000
Adjusted bank balance P 98,800 Adjusted balance P 98,800

The December bank statement, which has a beginning balance of P96,800, is reproduced below:

Bank of General Santos

Account Name: Bitter Trading
Date Debits Credits
December 1 P 18,000
December 2 P 7,200 40,000
December 4 24,000
December 6 48,000
December 8 400,000 CM 83
December 10 40,000 DM 97
December 11 56,000
December 16 20,000
December 18 64,000
December 21 72,400
December 28 36,000 80,000
December 31 4,000 DM 98 64,000 CM 84
Totals P 131,200 P 842,400
DM 97 – Customer’s DAIF check CM 83 – Note collected by bank
DM 98 – Service charges CM 84 – Account collected by bank

The company’s cash receipts and cash disbursements journals for the month of December 2009 are provided
below:

Cash Receipts Journal Cash Disbursements Journal

Date OR No. Amount Date Check No. Amount
Dec. 01 415 P 40,000 Dec. 01 286 P 16,000
05 416 48,000 03 287 24,000
10 417 56,000 10 288 32,000
17 418 64,000 14 289 20,000
20 419 72,000 20 290 28,000
30 420 80,000 23 291 36,000
31 421 88,800 26 292 40,000
28 293 44,000
________ 31 294 48,000
Total P 440,800 Total P 304,000

The company’s Cash in Bank ledger appears below:

 Cash in Bank
Balance P58,640 12/31201 CDJ P 304,000
3
12/01/2013 GJ 40,320
12/10/2013 GJ (CM83) 400,000
12/31/2013 CRJ 440,800

Questions:
7. How much is the outstanding checks as of December 31, 2013?
A. P 208,000 B. P 232,800 C. P 216,800 D. P 224,000
8. How much is the adjusted book receipts for December, 2013?
A. P 985,200 B. P 771,600 C. P 913,200 D. P 904,800
9. How much is the adjusted book disbursements for December, 2013?
A. P 347,840 B. P 348,000 C. P 332,000 D. P 339,200
10. How much is the adjusted cash balance as of December 31, 2013?
A. P 664,000 B. P 688,800 C. P 680,000 D. P 672,800
11. How much is the cash shortage as of December 31, 2013?
A. P 24,240 B. P 23,840 C. P 15,840 D. P0

PROBLEM 4
For the purpose of preparing proof of cash, Strong Company compiled the following data:

From the company’s records:

May 31 cash in bank balance P 50,000
Total receipts recorded in June 700,500
June 30 cash in bank balance 187,500

From the bank statement for the month of June:

Bank balance on May 31 35,300
Bank debits in June 593,300
Bank balance on June 30 179,500
Debit memo for an erroneous charge in May 15,000
Debit memo for a correction of a June deposit by Spring credited to the account of Strong 7,000
Debit memo for June service charge 1,500
Debit memo for June NSF check deposited (received by the company in June, with the returned 6,000
check)

Additional data:
 Banks service charges in May were P 1,200.
 There were no outstanding checks in both months. Deposits in transit were P 28,500 in May and P 4,000
in June.
 The company recorded the June NSF check in its books in June, but treated the check as reduction to cash
receipts.

Determine the following:

12. Adjusted book disbursements in June
A. P 570,500 B. P 563,000 C. P 569,300 D. P 571,300
13. Adjusted cash balance as of June 30
A. P 186,000 B. P 189,500 C. P 177,500 D. P 183,500
14. Cash shortage
A. P 0 B. P 2,500 C. P 2,000 D. P 500

PROBLEM 5
The following information pertains to the Cash in Bank account of Lagao Distributors, Inc. or the month of April,
2013:

 Balances per bank statement March 31, P 21,560, and April 30, P 23,040.

 Balances of Cash in Bank account in Lagao’s books: March 31, P 16,545, and April 30, P 22,680.

 Total receipts per books were P 222,190 of which P 1,210 was paid in cash to a creditor on April 16.

 Total charges in the bank statement during April were P 218,970.

 Undeposited receipts were: March 31, P 9,060 and April 30, P 10,120.

 Outstanding checks were: March 31, P 2,675 and April 30, P 1,930, of which a check for P 500 was certified by
the bank on April 22.

 NSF checks returned, recorded as reduction of cash receipts, were:

a. Returned by bank in April, recorded also in April, P 1,040
b. Returned by bank in April but recorded in May, P 860

 Collections by the bank not recorded by Lagao were P 12,150 in March, and P 11,640 in April.

 Bank service charges not entered in Lagao’s books were: March 31, P 750, and April 30, P 420.

 A check for P 950 of Lugaw was charged to the account of Lagao in error.

 A check drawn for P 840 was erroneously entered in the books as P 480.

Determine the following:

15. Adjusted balance - November
A. P 27,495 B. P 27,945 C. P 29,475 D. P 29,745
16. Adjusted receipts – December
A. P 216,775 B. P 221,510 C. P 212,510 D. P 217,765
17. Adjusted balance – December
A. P 36,280 B. P 32,680 C. P 38,620 D. P 32,860

PROBLEM 6
In the audit of Maya Inc.’s cash account, you obtained the following information:

The company’s bookkeeper prepared the following bank reconciliation as of November 30, 2013:

Balance per bank – Nov. 30, 2013 P 454,000

Undeposited collections 25,000
Bank service charges 500
Bank collection of customer’s note (40,000)
Outstanding checks: Number Amount
2318 15,000
 2400 25,000
2411 10,000 (50,000)
Balance per book – Nov. 30, 2013 389,500

Additional data are given as follows:

 Company records reveal the following:
Total collections from customers P 825,000
Total checks drawn 490,000

 Bank statement totals for December:

Charges P 619,000
Credits 845,000

 Check No. 2318 dated November 25, 2013, was entered as P 15,000 in payment of a voucher for P 150,000.
Upon examination of the checks returned by the bank, the actual amount of the check was P 150,000.

 Check No. 2902 dated December 20, 2013 was issued to replace a mutilated check (no. 2400), which was
returned by the payee. Both checks were recorded in the amount drawn, but no entry was made to cancel
check no. 2400.

 The December bank statement included a check drawn by KANLURAN TRADING for P 7,500.

 Un-deposited collections on December 31, 2011: P 40,000.

 The service charge for December was P 750. This was charged by the bank to another client.

 The bank collected a note receivable of P 35,000 on December 28, 2011, but the collection was not received
on time to be recorded by SILANGAN.

 The outstanding checks on December 31, 2011 were:

Check No. Amount Check No. Amount
2400 P 25,000 2983 P 11,500
2975 6,500 2999 20,500

Determine the following:

18. Unadjusted cash balance per books as of December 31, 2013
A. 764,000 B. P 763,750 C. P 724,500 D. P 828,500
19. Adjusted cash balance as of November 30, 2013
A. P 319,000 B. P 429,000 C. P 294,000 D. P 454,000
20. Adjusted book receipts for December 2013
A. P 860,000 B. P 865,000 C. P 852,500 D. P 910,000
21. Adjusted bank disbursement for December 2013
A. P 490,750 B. P 625,750 C. P 380,750 D. P 600,750
22. Adjusted cash balance as at December 31, 2013
A. P 688,250 B. P 663,250 C. P 689,000 D. P 673,250

PROBLEM 7: The accountant for the Muntinlupa Company assembled the following data:

June 30 July 31
Cash account balance P 15,822 P 39,745
Bank statement balance 107,082 137,817
Deposits in transit 8,201 12,880
Outstanding checks 27,718 30,112
Bank service charge 72 60
Customer's check deposited July 10, returned by bank on July 8,250
16 marked NSF, and redeposited immediately; no entry
made on books for return or redeposit
Collection by bank of company's notes receivable 71,815 80,900

The bank statements and the company's cash records show these totals:

Disbursements in July per bank statement P218,373

Cash receipts in July per Muntinlupa's books 236,452

QUESTIONS:

Based on the application of the necessary audit procedures and appreciation of the above data, you are to provide the answers
to the following:

11. How much is the adjusted cash balance as of June 30?

a. P87,565 c. P107,082
b. (P3,695) d. P15,822
12. How much is the adjusted bank receipts for July?
a. P253,787 c. P245,537
b. P214,802 d. P232,881
13. How much is the adjusted book disbursements for July?
a. P220,767 c. P181,782
b. P212,517 d. P206,673
14. How much is the adjusted cash balance as of July 31?
a. P137,817 c. P22,513
b. P112,335 d. P120,585
15. How much is the cash shortage as of July 31?
a. P8,250 c. P196,144
b. P71,815 d. P0

Problem 8: You are auditing the cash account of Carrera Inc. for the fiscal year ended July 31,2014. The
client has not prepared the July 31, bank reconciliation. The following information were made available:

General Ledger Bank Statement

Beginning balance P140,330 P 172,590
Deposits 751,680
Cash receipts journal 763,680
Checks clearing the bank (708,450)
Cash disbursements (654,330)
Journal
July bank service charge (2,610)
Note paid by the bank (183,000)
NSF check (9,330)
Ending balances P249,680 P20,880

Audit notes:
 a. Bank reconciliation in June included the following information: bank statement balance, June,
P172,590; Deposit in transit, P18,000; Outstanding checks, P52,2260, and; Balance per general
ledger, June P140,330.
b. Checks clearing the bank in July, outstanding by the end of June was at P50,760.
c. Check clearing the bank in July and were recorded in July cash disbursement journal was at
P614,010.
d. A check for P31,800 cleared the bank, but had not been recorded in the cash disbursement
journal. It was for a payment of an accounts payable.
e. A check for P11,800 was erroneously charged by the bank to Carrera Inc.
f. Deposits included P18,000 from June and P733,680 from July.
g. The bank charged Carrerra Inc.’s account for a non-sufficient-fund check totaling to P9,330. The
credit manager concluded that the customer intentionally closed its account and the owner left
the city. The check was turned over to a collection agency.
h. A note for P174,000, plus interest, was paid directly by the bank under an agreement signed
four months ago. The note payable was recorded at P 174,000 on Carrera Inc.’s books.
Required: based on your audit procedures and appreciation of the above data, answer the following:

1. How much is the total outstanding checks as of July 31?

a. 29,940 c. 41,820
b. 32,490 d. 10,020
2. How much is the deposit in transit as of July 31?
a. 20,940 c. 18,000
b. 30,000 d. 27,330
3. What is the correct cash in bank balance as of July 31?
a. 20,940 c. 32,820
b. 11,160 d. 9,060
4. How much is the cash in bank shortage as of June 31?
a. None c. 2,000
b. 1,200 d. 2,200

Proof of Cash , July31,2014

June 30 Receipt Disbursement July 31

Unadjusted balances, per bank statement 172,590 751,680 903,390 20,800

Deposit in transit, June 18,000 (18,000)
Deposit in transit , July (SQUEEZE) 30,000 30,000 1. Ans. C.
Outstanding checks, June (52,260) (52,260)
Outstanding checks, July(SQUEEZE) 41,820 (41,820) 2. Ans. C
Bank error, July Overstated disbursement (11,880) 11,880

Adjusted balances 138,330 763,680 881,070 20,940 3. Ans. A

March 31 Receipt Disbursement April 30

Unadjusted balances per book 140,330 760,680 654,330 249,660
Unrecorded bank debits, July payment of AP 31,800 (31,800)
Unrecorded bank debits, July USC 2,610 (2,610)
Unrecorded bank debits, July payment of NP 183,000 (183,000)
Unrecorded bank debits, July NSF 9,330 (9,330)

Adjusted balances 140,330 760,680 881,070 22,940

Cash in bank, shortage June 30 2,000 4. Ans. C

Problem 9: You are auditing the cash of Saluyot Corp. for the fiscal year ended September 30,2014.
The bank reconciliation prepared by the accountant of Saluyot Corp. for the months of August is presented
below:

Bank balance, per bank statement P156,000

Add: Deposit in transit, August 31 2,700
Total 158,700
Less: outstanding checks:
No. 547 P 600
561 5,400
562 4,200
565 1,800 12,000
Adjusted balance P 146,700

Book balance, per general ledger P 120,000

Add: proceeds of note receivable collected
By bank in August 24,000
Deposit made in bank on August 31 not
not recorded on books until
September 3,000
Total 147,000
Less: Bank Service Charge 300
Adjusted balance P 146,700

There was no available bank reconciliation for the month of September, instead, the accountant provided you
a copy of the September bank statement to aid you in your audit.

The September bank statement included the following bank debits and credits:
Particulars Debits Credits
Date:
August 31 Chk. #561 5,400 2,700
September 1 Chk. #562 4,200
September 9 Chk. #565 1,800 30,000
September 12 420 DM 420
September 15 Chk. #566 3,000
September 17 600
September 20 Chk. #567 2,100 42,000
September 27 Chk. #569 4,320
September 29 300 EC 300 EC
September 30 1,320 SV
September 30 900 DM
September 30 Chk. #570 5,460
SV- Service charges DM- Debit Memo
EC- Errors Corrected CM—Credit Memo

Further investigation revealed the following information:

a. All book reconciling items during August has been recorded in September
 b. The check register revealed that the last check issued in September was no. 571 for P3,000 and that
check no.568 was P7,200.
c. Cash received for the period September 25 through 31 of P28,200 was deposited in the bank on
October 1.
d. The debit memo on September 12 and September 30 were customer NSF checks returned by the
bank. The check on September 12 was immediately redeposited without entry. The check returned
on September 31 was redeposited by the client in the bank on October 1 also without entry.
e. Among the bank credits for the month was P600 deposit of Balluyot Corp. credited by the bank to the
company’s account.
Required : Based on your audit procedures and appreciation of the above data, answer the following:

1. How much is the unadjusted bank balance as of September 30,2014?

a. 101,100 b. 109,200 c. 192,900 d. 202,800
2. How much is the total book receipts for September?
.a. 75,420 b. 106,620 c. 127,200 d. 129,900
3. How much is the total disbursements for September?
a. 25,080 b. 25,380 c. 26,280 d. 29,220
4. How much is the unadjusted book balance as of September 30,2014?
a. 221,820 b. 222,120 c. 224,,620 d. 224,920
5. How much is the adjusted cash balance as of September 31, 2014?
a. 219,000 b. 219,600 c. 220,200 d. 221,820

SOLUTIONS:
Proof of Cash, September 30,2014

August 31 Receipt Disbursement September 30

Unadjusted balances per bank statement 156,000 76,020 29,220 202,800 1. Ans. D
Deposit in Transit, August 2,700 (2,700)
Deposit in transit , September 28,200 28,200
Outstanding checks, August (12,000) (12,000)
Outstanding checks, September 10,800 (10,800)
Bank error, Sept.corrected also in September (300) (300)
Bank error, Sept. overstated receipt (600) (600)

Adjusted balances 146,700 100,620 27,720 219,600 5. Ans. B

August 31 Receipt Disbursement September 30

Unadjusted balances per book 120,000 127,200 25,380 221,820 4. Ans. A
Unrecorded bank credit: August 27,000 (27,000)
Unrecorded bank debits: BSC,August (300) (300)
Unrecorded bank debits, BSC, Sept. 1,320 (1,320)
Unrecorded bank debits: NSF, Sept. 12 420 420
Unrecorded bank debits: NSF, Sept. 30 900 (900)

Adjusted balances 146,700 100,620 27,220 219,600

 2. Ans. C 3. Ans. B

Problem 10: Laser Corp. has a current account in PNB. Your audit of the company’s cash account reveals the
following:

a. Balances, taken from the company’s general ledger:

Cash balance, November 30, 2014 P637,860
Cash balance, December 31, 2014 576,420
Receipts, December 1 – 31, 2014 306,220
b. Balances taken from the December bank statement:
Bank balance, November 30, 2014 P685,180
Bank balance, December 31, 2014 637,220
Disbursements (debit) 356,080
c. Outstanding checks, November 30, 2014 (P26,140 was paid by the bank in December), P64,140.
d. Checks written and recorded in December, not included in the checks returned with the December
bank statement, P36,080.
e. Deposit in transit, November 30, 2014, P15,260.
f. Deposit in transit, December 31, 2014, P16,140.
g. A bank credit memo was issued in December to correct an erroneous charge made in November,
P1,500.
h. Note collected by bank in December (company was not informed of the collection), P2,060.
i. A check for P2,020 (payable to a supplier) was recorded in the Check Register in December as
P3,000.
j. A check for P2,240 was charged by the bank as P2,240 in December.
k. Laser Co. issued a stop payment order to bank in December. This pertains to a check written in
December which was not received by the payee. A new check was written and recorded in the Check
Register in December. The old check was written off by a journal entry also in December, P780.
l. Bank service charge, November 30, 2014, P60.

1. What is the total book disbursements in December?

a. 367,660 b. 244,780 c. 369,720 d. 368,540
2. What is the total bank receipts in December?
a. 260,160 b. 308,120 c. 306,060 d. 309,020
3. What is the total outstanding check on December 31?
a. 100,220 b. 38,000 c. 62,220 d. 74,080
4. What is the adjusted bank balance on November 30?
a. 636,300 b. 685,180 c. 637,800 d. 634,800
5. What is the adjusted book receipts in December?
a. 307,500 b. 306,220 c. 303,380 d. 305,440
6. What is the adjusted bank disbursements in December?
a. 353,980 b. 365,840 c. 345,960 d. 366,020
7. What is the adjusted book balance on December 31?
a. 577,500 b. 577,400 c. 576,420 d. 579,460

Problem 3-Laser Corporation

Book balance, November 30 P637,860
Add: Book receipts in December 306,220_
Total P944,080
Less: Book Disbursement, Dec (SQZ) 367,660 1. Ans. A
Book balance, Dec. 31 P576,420
Book balance, November 31 P685,180
Add: Bank receipts Dec. (SQZ) 308,120_ 2. Ans. B
Book balance, Dec. 31 P637,220

Checks issued prior to Dec.

(64,140-26,140) P38,000
Checks issued in Dec. 36,080
Total outstanding checks, Dec. 31 P74,080 3. Ans. D

Proof of Cash
December 31, 2014
Nov. 30 Receipts Disbursements Dec.31
Unadjusted book balance 637,860 306,220 367,660 576,420
Note collected by the bank in Dec. 2,060 2,060
Bank service charged in Nov. (60) (60)
Overstatement of Dec. book
disbursement( 3,000-2,020) (980) 980
Check stopped for payment* (780) (780)____________________
ADJUSTED BALANCES 637,800 307,500 365,840 579,460

Nov. 30 Receipts Disbursements Dec. 31

Unadjusted bank balances 685,180 308,120 356,080 637,220
Deposit in transit
November 30 15,260 (15,260)
Dec. 31 16,140 16,140
Outstanding checks
November 30 (64,140) (64,140)
Dec.31 74,080 (74,080)
Erroneous bank charge in November 1,500 (1,500)
Overstatement of bank disbursement
In December (180) 180__
ADJUSTED BALANCES 637,800 307,500 365,840 579,460
4. Ans. C 5. Ans. A 6. Ans. B 7. Ans. D

PROBLEM 11
In the audit of Tina Company’s cash account, you obtained the following information:
The company’s bookkeeper prepared the following bank reconciliation as of November 30, 2015:
Bank balance – November 30, 2015 P90,800
Undeposited collections 5,000
Bank service charges 100
Bank collection of customer’s note (8,000)
Outstanding checks:
Number Amount
7159 P3,000
7767 5,000
7915 2,000 (10,000)
Book balance – November 30, 2015 P77,900

Additional data are given as follows:

Company recordings for December:

Total collections from customers P165,000
 Total checks drawn 98,000
Bank statement totals for December :
Charges P123,800
Credits 169,000
Check no. 7159 dated November 25, 2015, was entered as P3,000 in payment of a voucher for P30,000. Upon
examination of the checks returned by the bank, the actual amount of the check was P30,000.
Check no. 8113 dated December 20, 2015 was issued to replace a mutilated check (no.7767), which was returned
by the payee. Both checks were recorded in the amount drawn, P5,000, but no entry was made to cancel check no.
7767.
The December bank statement included a check drawn by Sipag Company for P1,500.

Undeposited collections on December 31, 2015 - P8,000.

The service charge for December was P150 which was charged by the bank to another client.

The bank collected a note receivable of P7,000 on December 28, 2015, but the collection was not received on time
to be recorded by Tina.

The outstanding checks on December 31, 2015, were:

Check No. Amount Check No. Amount
7767 P5,000 8910 P2,300
8856 1,300 8925 4,100
QUESTIONS:
Based on the above and the result of your audit, determine the following:
1. Unadjusted cash balance per books as of December 31, 2015
a. P152,800 b. P152,750 c. P144,900 d. P165,700
2. Adjusted cash balance as of November 30, 2015
a. P85,800 b. P58,800 c. P63,800 d. P90,800
3. Adjusted book receipts for December 2015
a. P170,500 b. P182,000 c. P172,000 d. P173,000
4. Adjusted bank disbursement for December 2015
a. P120,150 b. P76,150 c. P125,150 d. P 98,150
5. Adjusted cash balance as of December 31, 2015
a. P132,650 b. P137,650 c. P137,800 d. P134,650

Suggested Solution:
Question No. 1

Unadjusted book balance, 11/30/06 P77,900

Add unadjusted book receipts:
Collection from customers P165,000
Note collected by bank in Nov. presumed
recorded in Dec. 8,000 173,000
Total 250,900
Less unadjusted book disbursements:
Checks drawn 98,000
BSC for Nov. presumed recorded in Dec. 100 98,100
Unadjusted book balance, 12/31/06 P152,800

Question Nos. 2 to 5

Pasig Company
Proof of Cash
For the month ended December 31, 2006

Beginning Ending
Nov. 30 Receipts Disb. Dec. 31

Balance per bank

statement P90,800 P169,000 P123,800 P136,000a
Deposits in transit:
November 30 5,000 (5,000)
December 31 8,000 8,000
Outstanding checks:
November 30 (32,000) (32,000)
December 31 7,700 (7,700)
Bank errors – Dec.
Check of Sipag Co. (1,500) 1,500
BSC charged to
another client 150 (150)
Adjusted bank balance
P63,800 P172,000 P 98,150 P137,650

P77,900 P173,000 P98,100 P152,800

Balance per books
Customer's note
collected by bank:
November 8,000 (8,000)
December 7,000 7,000
Bank service charge:
November (100) (100)
December 150 (150)
Book errors:
Check no. 7159
(P30,000-P3,000) (27,000) (27,000)
Check no. 7767
(mutilated check) 5,000 5,000
Adjusted book balance
P63,800 P172,000 P 98,150 P137,650

a
(P90,800 + P169,000 – P123,800)

Answers: 1) A; 2) C; 3) C; 4) D; 5) B

Shown below is the bank reconciliation for Marikina Company for November 2006:
Balance per bank, Nov. 30, 2006 P150,000
Add: Deposits in transit 24,000
Total 174,000
Less: Outstanding checks P28,000
Bank credit recorded in error 10,000 38,000
Cash balance per books, Nov. 30, 2006 P136,000
The bank statement for December 2006 contains the following data:
Total deposits P110,000
Total charges, including an NSF check of P8,000 and a
service charge of P400 96,000

All outstanding checks on November 30, 2006, including the bank credit, were cleared in the bank 1n
December 2006.

There were outstanding checks of P30,000 and deposits in transit of P38,000 on December 31, 2006.

Questions:
Based on the above and the result of your audit, answer the following:
1.How much is the cash balance per bank on December 31, 2006?
a. P154,000 c. P164,000
b. P150,000 d. P172,400
2.How much is the December receipts per books?
a. P124,000 c. P110,000
b. P 96,000 d. P148,000

3.How much is the December disbursements per books?

a. P96,000 c. P89,600
b. P79,600 d. P98,000
4.How much is the cash balance per books on December 31, 2006?
a. P150,000 c. P180,400
b. P170,400 d. P162,000
5.The adjusted cash in bank balance as of December 31, 2006 is
a. P141,600 c. P172,000
b. P162,000 d. P196,000

Suggested Solution:
Question No. 1
Balance per bank, Nov. 30, 2006 P150,000
Add: Total deposits per bank statement 110,000
Total 260,000
Less: Total charges per bank statement 96,000
Balance per bank, Dec. 31, 2006 P164,000

Question No. 2
Total deposits per bank statement P110,000
Less deposits in transit, Nov. 30 24,000
Dec. receipts cleared through the bank 86,000
Add deposits in transit, Dec. 31 38,000
December receipts per books P124,000
Question No. 3
Total charges per bank statement P96,000
Less: Outstanding checks, Nov. 30 P28,000
Correction of erroneous bank credit 10,000
December NSF check 8,000
December bank service charge 400 46,400
Dec. disb. cleared through the bank 49,600
Add outstanding checks, Dec. 31 30,000
December disbursements per books P79,600

Question No. 4
Balance per books, Nov. 30, 2006 P136,000
Add December receipts per books 124,000
Total 260,000
Less December disbursements per books 79,600
Balance per books, Dec. 31, 2006 P180,400

Question No. 5
Balance per bank statement, 12/31/06 P164,000
Deposits in transit 38,000
Outstanding checks ( 30,000)
Adjusted bank balance, 12/31/06 P172,000

Balance per books, 12/31/06 P180,400

NSF check ( 8,000)
Bank service charges ( 400)
Adjusted book balance, 12/31/06 P172,000

Answers: 1) C; 2) A; 3) B; 4) C; 5) C

PROBLEM NO. 8
The accountant for the Muntinlupa Company assembled the following data:
June 30 July 31
Cash account balance P 15,822 P 39,745
Bank statement balance 107,082 137,817
Deposits in transit 8,201 12,880
Outstanding checks 27,718 30,112
Bank service charge 72 60
Customer's check deposited July 10, returned by 8,250
bank on July 16 marked NSF, and redeposited
immediately; no entry made on books for return or
redeposit
Collection by bank of company's notes receivable 71,815 80,900

The bank statements and the company's cash records show these totals:

Disbursements in July per bank statement P218,373

Cash receipts in July per Muntinlupa's books 236,452

QUESTIONS:
Based on the application of the necessary audit procedures and appreciation of the above data, you are
to provide the answers to the following:
1.How much is the adjusted cash balance as of June 30?
a. P87,565 c. P107,082
b. (P3,695) d. P15,822
2.How much is the adjusted bank receipts for July?
a. P253,787 c. P245,537
b. P214,802 d. P232,881
3.How much is the adjusted book disbursements for July?
a. P220,767 c. P181,782
b. P212,517 d. P206,673
4.How much is the adjusted cash balance as of July 31?
a. P137,817 c. P22,513
b. P112,335 d. P120,585
5.How much is the cash shortage as of July 31?
a. P8,250 c. P196,144
b. P71,815 d. P0

Suggested Solution:
Muntinlupa Company
Reconciliation of Receipts, Disbursements, and Bank Balance
For the month ended July 31
Beginning Ending
June 30 Receipts Disb. July 31
Balance per bank
statement P107,082 P249,108a P218,373 P137,817
Deposits in transit:
June 30 8,201 (8,201)
July 31 12,880 12,880
Outstanding checks:
June 30 (27,718) (27,718)
July 31 30,112 (30,112)
NSF check redeposited
(8,250) (8,250)
Adjusted bank balance
P 87,565 P245,537 P212,517 P120,585

Balance per books P 15,822 P236,452 P212,529b P 39,745

Bank service charge:
June (72) (72)
July 60 (60)
Collection of notes
receivable:
June 71,815 (71,815)
July 80,900 80,900
Adjusted book balance
P 87,565 P245,537 P212,517 P120,585
a
(P137,817 + P218,373 – P107,082)
b
(P15,822 + 236,452 – P39,745)

Answers: 1) A; 2) C; 3) B; 4) D; 5) D

You obtained the following information on the current account of Parañaque Company during your
examination of its financial statements for the year ended December 31, 2006.

The bank statement on November 30, 2006 showed a balance of P306,000. Among the bank credits in
November was customer’s note for P100,000 collected for the account of the company which the
company recognized in December among its receipts. Included in the bank debits were cost of
checkbooks amounting to P1,200 and a P40,000 check which was charged by the bank in error against
Parañaque Co. account. Also in November you ascertained that there were deposits in transit
amounting to P80,000 and outstanding checks totaling P170,000.

The bank statement for the month of December showed total credits of P416,000 and total charges of
P204,000. The company’s books for December showed total debits of P735,600, total credits of
P407,200 and a balance of P485,600. Bank debit memos for December were: No. 121 for service
charges, P1,600 and No. 122 on a customer’s returned check marked “Refer to Drawer” for P24,000.

On December 31, 2006 the company placed with the bank a customer’s promissory note with a face
value of P120,000 for collection. The company treated this note as part of its receipts although the bank
was able to collect on the note only in January, 2007.

A check for P3,960 was recorded in the company cash payments books in December as P39,600.

QUESTIONS:
Based on the application of the necessary audit procedures and appreciation of the above data, you are
to provide the answers to the following:
1.How much is the undeposited collections as of December 31, 2006?
a. P339,600 c. P219,600
b. P179,600 d. P139,600
2.How much is the outstanding checks as of December 31, 2006?
a. P191,960 c. P361,960
b. P397,600 d. P363,160
3.How much is the adjusted cash balance as of November 30, 2006?
a. P216,000 c. P176,000
b. P256,000 d. P157,200
4.How much is the adjusted bank receipts for December?
a. P635,600 c. P475,600
b. P515,600 d. P435,600
5.How much is the adjusted book disbursements for December?
a. P395,960 c. P225,960
b. P431,600 d. P397,160
6.How much is the adjusted cash balance as of December 31, 2006?
a. P625,640 c. P220,000
b. P195,640 d. P375,640

Suggested Solution:
Question No. 1
Deposits in transit, 11/30/06 P80,000
Add collections in December:
December book receipts P735,600
Less receipts not representing
collections in December:
Customer’s note collected by bank
in Nov. recorded in Dec. P100,000
Uncollected customer's note
treated as receipts 120,000 220,000 515,600
Total 595,600

Less deposits credited by the bank in

December:
December bank receipts P416,000
Less receipts not representing deposits:
Erroneous bank debit, Nov.; corrected
Dec. 40,000 376,000
Deposits in transit, 12/31/06 P219,600

Question No. 2
Outstanding checks, 11/30/06 P170,000
Add checks issued in December:
December book disbursements P407,200
Less disbursements not
representing checks issued in
December:
Bank service charge, Nov.;
recorded Dec. P1,200

Error in recording a check (should

be P3,960, recorded as P39,600) 35,640 36,840 370,360
Total 540,360
Less checks paid by the bank in
December:
December bank disbursements P204,000
Less disbursements not representing
checks:
Bank service charge, Dec. P1,600
NSF check, Dec. 24,000 25,600 178,400
Outstanding checks, 12/31/06 P361,960

Question Nos. 3 to 6
Parañaque Company
Proof of Cash
For the month ended December 31, 2006
Beginning Ending
Nov. 30 Receipts Disb. Dec. 31
Balance per bank
statement P306,000 P416,000 P204,000 P518,000a
Deposits in transit:
November 30 80,000 (80,000)
December 31 219,600 219,600
Outstanding checks:
November 30 (170,000) (170,000)
December 31 361,960 (361,960)
Erroneous bank debit-
November 40,000 (40,000)
Adjusted bank balance
P256,000 P515,600 P395,960 P375,640

Balance per books P157,200b P735,600 P407,200 P485,600

Customer's note
collected by bank –
November 100,000 (100,000)
Bank service charge:
November (1,200) (1,200)
December 1,600 (1,600)
NSF check – December
24,000 (24,000)
Book errors – December
Uncollected
customer's note
treated as receipts (120,000) (120,000)
Error in recording a
check (should be
P3,960, recorded as
P39,600) (35,640) 35,640
Adjusted book balance
P256,000 P515,600 P395,960 P375,640
a
(P306,000 + P416,000 – P204,000)
b
(P485,600 + 407,200 – P735,600)
You were able to obtain the following information in connection with your audit of the Cash account of
the Pasay Company as of December 31, 2006:
November 30 December 31
Balances per bank P480,000 P420,000
Balances per books 504,000 539,000
Undeposited collections 244,000 300,000
Outstanding checks 150,000 120,000

a. The bank statement for the month of December showed total credits of P240,000 while the
debits per books totaled P735,000.

b. NSF checks are recorded as a reduction of cash receipts. NSF checks which are later
redeposited are then recorded as regular receipts. Data regarding NSF checks are as follows:
1. Returned by the bank in Nov. and recorded by the company in Dec., P10,000.
2. Returned by the bank in Dec. and recorded by the company in Dec., P25,000.
3. Returned by the bank in Dec. and recorded by the company in Jan., P29,000.

c. Check of Pasaway Company amounting to P90,000 was charged to the company’s account by
the bank in error on December 31.

d. A bank memo stated that the company’s account was credited for the net proceeds of Anito’s
note for P106,000.

e. The company has hypothecated its accounts receivable with the bank under an agreement
whereby the bank lends the company 80% of the hypothecated accounts receivable. The
company performs accounting and collection of the accounts. Adjustments of the loan are
made from daily sales reports and deposits.

f. The bank credits the company account and increases the amount of the loan for 80% of the
reported sales. The loan agreement states specifically that the sales report must be accepted
by the bank before the company is credited. Sales reports are forwarded by the company to
the bank on the first day following the date of sale. The bank allocates each deposit 80% to
the payment of the loan, and 20% to the company account. Thus, only 80% of each day’s
sales and 20% of each collection deposits are entered on the bank statement. The company
accountant records the hypothecation of new accounts receivable (80% of sales) as a debit to
Cash and a credit to the bank loan as of the date of sales. One hundred percent of the
collection on accounts receivable is recorded as a cash receipt; 80% of the collection is
recorded in the cash disbursements books as a payment on the loan. In connection with the
hypothecation, the following facts were determined:
 Included in the undeposited collections is cash from the hypothecation of accounts
receivable. Sales were P180,000 on November 30, and P200,000 at December 31. The
balance was made up from collections which were entered on the books in the manner
indicated above.
 Collections on accounts receivable deposited in December, other than deposits in transit,
totaled P725,000.
g. Interest on the bank loan for the month of December charged by the bank but not recorded in
the books, amounted to P38,000.

QUESTIONS:
Based on the above and the result of your audit, answer the following:
1. How much is the adjusted cash balance as of November 30, 2006?
a. P574,000 c. P430,000
b. P394,000 d. P350,000
2.How much is the adjusted book receipts for December, 2006?
a. P860,000 c. P876,000
b. P280,000 d. P296,000
3.How much is the adjusted book disbursements for December, 2006?
a. P180,000 c. P180,000
b. P905,000 d. P760,000
4.How much is the adjusted cash balance as of December 31, 2006?
a. P690,000 c. P440,000
b. P530,000 d. P490,000
5.How much is the cash shortage as of December 31, 2006?
a. P32,000 c. P8,000
b. P90,000 d. P0
Suggested Solution:
Pasay Company
Proof of Cash
For the month ended December 31, 2006
Beginning Ending
Nov. 30 Receipts Disb. Dec. 31
Balance per bank
statement P480,000 P240,000 P300,000a P420,000
Deposits in transit:
November 30 100,000c (100,000)
December 31 140,000d 140,000
Outstanding checks:
November 30 (150,000) (150,000)
December 31 120,000 (120,000)
Erroneous bank debit-
December (90,000) 90,000
Deposits with loan
payment (P725,000 x
80%) 580,000 580,000
Adjusted bank balance
P430,000 P860,000 P760,000 P530,000

Balance per books P504,000 P735,000 P700,000b P539,000

NSF checks:
Returned in Nov.,
recorded in Dec. (10,000) 10,000
Returned and recorded in
Dec. 25,000 25,000
Returned in Dec.,
recorded in Jan. 29,000 (29,000)
Customer's note
collected by bank -
December 106,000 106,000
Anticipated loan
proceeds from AR
hypothecation:
Nov. 30 sales (P180,000
 Beginning Ending
Nov. 30 Receipts Disb. Dec. 31
x 80%) (144,000) 144,000
Dec. 31 sales (P200,000 (160,000)
x 80%) (160,000)

Anticipated loan
payment from
undeposited
collections:
Nov. 30
(P100,000 x 80%) 80,000 80,000
Dec. 31
(P140,000 x 80%) (112,000) 112,000
Interest charge for bank
loan in Dec. 38,000 (38,000)
Adjusted book
balance P430,000 P860,000 P760,000 P530,000
a
(P480,000 + P240,000 – P420,000)
b
(P504,000 + 735,000 – P539,000)
c[
P244,000 – (P180,000 x 80%)]
d[
P300,000 – (P200,000 x 80%)]

Answers: 1) C; 2) A; 3) D; 4) B; 5) D

PROBLEM NO. 14

You were engaged to audit the accounts of Taguig Corporation for the year ended December 31, 2006. In your
examination, you determined that the Cash account represents both cash on hand and cash in bank. You further noted
that the company’s internal control over cash is very poor.

You started the audit on January 15, 2007. Based on your cash count on this date, cash on hand amounted to P19,200.
Examination of the cash book and other evidence of transactions disclosed the following:

January collections per duplicate receipts, P75,200.

Total duplicate deposit slips, all dated January, P44,000. This amount includes a deposit representing collections on
December 31.

Cash book balance at December 31, 2006 amounted to P186,000, representing both cash on hand and cash in bank.

Bank statement for December showed a balance of P170,400.

Outstanding checks at December 31:

November checks December checks
No. 280 P1,800 No. 331 P2,400
290 6,600 339 1,600
345 20,000
 353 3,600
364 10,000

Undeposited collections at December 31, 2006 amounted to P20,000.

An amount of P4,400 representing proceeds of a clean draft on a customer was credited by bank, but is not yet taken up
in the company’s books.

Bank service charges for December, P400.

The company cashier presented to you the following reconciliation statement for December, 2006, which he has
prepared:

Balance per books, December 31, 2006 P180,600

Add outstanding checks:
No. 331 P2,400
339 1,600
345 2,000
353 3,600
364 1,000 10,600
Total 191,200
Bank service charge (400)
Undeposited collections (20,400)
Balance per bank, December 31, 2006 P170,400

QUESTIONS:

Based on the above and the result of your audit, answer the following:

1. How much is the adjusted cash balance as of December 31, 2006?

a. P152,800 c. P180,200
b. P144,400 d. P 0
2. How much is the cash shortage as of December 31, 2006?
a. P45,600 c. P37,200
b. P 4,400 d. P41,200
3. How much is the cash shortage for the period January 1 to 15, 2007?
a. P30,800 c. P31,200
b. P32,400 d. P32,000
4. Which of the following is not a method used by the cashier to cover-up the shortage as of December 31, 2006?
Understating outstanding checks by P27,000.
Not recording the bank collection of P4,400.
Understating the book balance by P5,400.
Overstatement of undeposited collections by P400.

Suggested Solution:

Questions No. 1 and 2

Bank Books
Unadjusted balances P170,400 P186,000
Add (deduct) adjustments:
Outstanding checks: (46,000)
Undeposited collections 20,000
Unrecorded bank collection 4,400
 Bank service charge (400)
Balances 144,400 190,000
Shortage (45,600)
Adjusted balances P144,400 P144,400

Question No. 3
Collections per records P75,200
Add undeposited collections, Dec. 31 20,000
Total cash that should be deposited in January 95,200
Less January deposits 44,000
Undeposited collections, Jan. 15 51,200
Less undeposited collections per cash count 19,200
Shortage, Jan. 1 to 15, 2007 P32,000

Question No. 4
Cover-up for the December 31, 2006 shortage:
Non-recording of bank collection P 4,400
Understatement of book balance
(P186,000 - P180,600) 5,400
Understatement of outstanding checks (P46,000 -
P10,600) 35,400
Overstatement of undeposited collections (P20,400 -
P20,000) 400
Total shortage, December 31, 2006 P45,600

Answers: 1) B; 2) A; 3) D; 4) A